Gambling platform PredictIt has been told to shut up shop by the Commodity Futures Trading Commission (CFTC) for failure to comply with regulations.
The CFTC ordered the political gambling platform to cease operations by next Feb. The firm has operated in the U.S. since 2014. It was the leading platform for individuals to bet on the outcomes of American elections, which is usually forbidden.
PredictIt operated under a research license given to the Victoria University of Wellington in New Zealand, with which it is closely affiliated. Wagers are capped at $850 and mainstream media has always cited PredictIt odds given its academic roots.
“Predictit.org is an experimental project operated for academic purposes under permission from the CFTC,” read the disclaimer on its website.
The CFTC’s latest order gives PredictIt a window to conclude operation till Feb 15. This means citizens can still place bets on markets like whether Alexandria Ocasio-Cortez will run for President in 2024.
CTFC unclear on reason for ban
The CFTC did not give a clear reason for revoking the operational license of Victoria University of Wellington. Instead, the Commission claimed in a statement that the entity had “not operated its market in compliance with the terms” of its license.
It could be inferred that PredictIt’s failure to register with the CFTC as a derivatives exchange might have moved the hand of the regulator.
However, PredictIt has disagreed with the ruling, claiming that it is fully compliant with the rules. The team wrote that they will carry out normal operations till the deadline approaches but it remains unclear how the platform intends to settle contracts after Feb 15.
The ubiquity of prediction markets
Prediction markets like PredictIt have been relied on by political commentators and mainstream media, but a cross section of individuals is viewing the industry with a great deal of skepticism.
“For those who are interested in market-based predictions of political outcomes, including journalists and researchers, there is really no close substitute,” said Rajiv Sethi, a professor of Economics at Columbia University.